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They Keep Giving us Reasons to Move Our Money

They being financial conglomerates/big banks.  First, they crashed the economy and then needed a taxpayer bailout.  Then to recoup losses they jacked up service fees and created new ones.  Now, they continue to fight hard against any form of financial regulatory reform and search for loop holes to gouge customers. 

We are much to blame for allowing financial conglomerate/big banks to suck the money from our pockets.  There are alternatives - community banks and credit unions.  We really don’t need them.

Besides, continuing to do business with this vampires we also are to blame for allowing them to gouge us with overdraft fees.  Overdraft fees are a huge money maker for financial conglomerates/big banks.  With proper budgeting, monthly balancing of check book, and knowing where our money is going we should NOT be giving our money to these vampires in the form of overdraft fees.

Now, comes word that financial conglomerates/big banks, in there quest to maintain their ginormous, ‘too big to fail’, size they are pulling out the stops to defend their sucking of overdraft fees from us.  First, this from the New York Times:

As the government cracks down on the way banks charge fees for overspending on debit cards, the industry is mounting an aggressive campaign aimed at keeping billions of dollars in penalty income flowing into its coffers. Chase and other banks are preparing a full-court marketing blitz, which is likely to include filling mailboxes with various aggressive and persuasive letters, calling account holders directly, and sending a steady stream of e-mail to urge consumers to keep their overdraft service turned on.

Starting this summer, banks must get consumers to agree, or “opt in,” to a service covering purchases on a debit card when there is not enough money in their account. The Federal Reserve has ordered the same restriction for banks that want to let people withdraw more than their balance at an automated teller machine. Many banks now automatically provide such coverage for fees of up to $35 or more.

This graph, from the above NYT article, give you an idea of what they are defending:

Then comes word of an even more insidious move by big banks: Banks May Use Payday-Style Loans to Replace Lost Overdraft Fees:

U.S. banks may expand their short- term lending at interest rates of 120 percent or more as they seek to replace more than $15 billion in lost revenue because of regulations limiting overdraft fees.

“The smarter banks are trying to resell overdraft protection to consumers as a different product,” said Elizabeth Rowe, group director of banking advisory services at Mercator Advisory Group in Maynard, Massachusetts.

Guess what, they are not going to call them “payday loans” because of the “tarnished negative brand” of these predatory financial products.  “Payday loans” are not different than the a juice loan from a loan shark.  Interest rates anywhere from 120% to over 300% per annum. 

Every day these financial conglomerates/big banks give us a reason to move our money.  If Congress and the White House are too scared to take on the financial conglomerates/big banks then it is up to us to do by changing our banking relationships.  But, even if we do that there are things we still must do:

1) Monthly Budgets and stick to them; and

2) Balancing our check books.

Good luck.

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Sins of the mega-banks

Posted by: Escortrider on 2010 04 17

While I certainly agree with you that overdraft fees are excessive and predatory, I do not think they are the worst sin of the banks because consumers have a choice about incurring them; no one HAS TO attempt to spend money he doesn’t have.  Such a person is playing into the hands of the predators, and I find that ignorance and lack of awareness as scary as the behavior of the banks.  I think the banks have done a lot more damage with their shaky real estate loans, as the recent WA MU testimony is finally making clear to a larger public.  And which one of them was it which helped Greece to hide its debt?  If that isn’t criminal, I think it should be.

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